Australia’s Regional Express (Rex) has alleged that larger local rival airline Qantas is “desperate to kill it off.” It was one of a series of claims Rex’s Deputy Chairman made in a media statement on Wednesday. The claims are the latest in a war of words between the two airlines.
Wednesday’s comments, attributed to Rex Deputy Chairman John Sharp, continues a pattern of outlandish claims from Rex regarding Qantas. Rex’s antagonism towards Qantas stems from its belief the bigger airline is dumping capacity onto regional routes within Australia and trying to force Rex out of certain markets.
Rex repeats claims regarding Qantas’ finances
In addition to running an anti-Qantas media campaign, Rex has raised its capacity dumping concerns with Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC). Amid these claims, the ACCC is keeping an eye on the local industry. Last week, the ACCC said it would take enforcement action if necessary.
Welcoming the ACCC position, Rex took the opportunity to again round on Qantas, repeating allegations of “technical insolvency,” unconscionable use of taxpayer’s money, holding onto customer’s ticket money, and trying to kill off Rex.
“On face value, Qantas is technically insolvent with net tangible assets over a hundred times smaller than Rex’s. Its unencumbered cash is insufficient to refund the tickets that are eligible for a refund,” said Mr Sharp today.
Rex claims Qantas has been selling international travel tickets for flights it has no chances of flying, merely to generate cash. Simple Flying does not say any of these claims are true, only that Rex has made them.
“Qantas’ situation is so dire that it needed one of the largest bail-outs in Australian corporate history from the Commonwealth amounting to (AU)$1.5 billion to date and possibly reaching (AU)$2 billion by year-end. In these circumstances, it is unconscionable to be using taxpayer’s money to fund heavily loss-making and anti-competitive actions that harm consumers by damaging and weakening competition.”
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Qantas refutes Rex’s allegations
For its part, Qantas has a dedicated page on its website rebuffing Rex’s claims. The airline denies claims it is technically insolvent, saying it is one of the few airlines anywhere to retain an investment-grade credit rating. As of April 30, Qantas was sitting on US$1.81 billion in available cash and US$1.21 billion of undrawn debt facilities. Qantas expects to be cash-flow positive in the second half of 2021.
Australia’s national carrier also denies it got excess funding from the Commonwealth. Qantas acknowledges it received significant Commonwealth funding, but Qantas also notes it has a 70% market share within Australia. The airline says if you go by business size, Rex received seven times as much Commonwealth funding in 2020 as Qantas did. Qantas also says the bulk of any Commonwealth financial support it did get was in the form of payroll assistance, and that went straight to employees rather than the airline.
Qantas also disputes they’ve been selling tickets on international services the airline never intended to operate.
“Throughout the pandemic, we’ve regularly adjusted our assumptions for the restart of our international operations,” the airline says.
“As we’ve seen with the New Zealand bubble, which opened earlier than anticipated, things can change quickly. We maintain the flexibility to bring forward, push back or stagger the resumption of our international flights.
“If a customer’s Qantas flight is canceled due to COVID, they can choose between rebooking, a voucher, or a refund. Most customers have opted for a travel voucher.”
Rex says it is one of the most efficient and best-performing airlines in the world
No airline has a perfect track record when it comes to refunds in the last year. Rex recently posted full-page ads in major Australian newspapers that highlighted social media complaints about Qantas and its refund process. However, Qantas seems happy to roll with the social media punches. Rex, in contrast, deletes negative social media comments made on its pages. The airline says it chooses to restrict public access to biased or unreasonable posts.
Rex prefers to create a sunnier outlook regarding its fortunes. While plenty of people are dubious about Rex’s chances to succeed with its new Boeing 737 services (competing against Qantas), John Sharp insists all is going well at the airline. Remarkably well, in fact.
“Rex is one of the most efficient and best-performing airlines in the world over the last 12 years, on par with Southwest Airlines and twice as profitable as Singapore Airlines,” Rex’s Deputy Chairman says.
“Understandably, Qantas is desperate to kill off Rex as it knows that it will have no chance against Rex once the latter is fully established in the domestic market.”
Qantas CEO says credibility is everything
Simple Flying doesn’t know what Qantas really thinks about Rex. Probably not much, other than wishing they’d shut up. Qantas has long said it welcomes competition, saying competition makes Qantas a better airline. But occasionally, exasperated Qantas executives will lob a volley back.
“The frequency with which Rex makes baseless criticisms of Qantas points to it being a key part of their strategy. That strategy is driven by John Sharp, who left politics under a cloud and has shown an approach to corporate communications that seems to confuse it for parliamentary privilege,” wrote Qantas CEO Alan Joyce wrote in April.
“In business, credibility is everything. Your customers, investors, and the market need to know they can believe what you’re saying.”